An expression cloning screen was used to isolate a novel gene homologous to the extracellular cysteine-rich domain of frizzled receptors. The gene (which we called sizzled for secreted frizzled) was shown to encode a soluble secreted protein, containing a functional signal sequence but no transmembrane domains. Sizzled (szl) is capable of inhibiting Xwnt8 as assayed by (1) dose-dependent inhibition of siamois induction by Xwnt8 in animal caps, (2) rescue of embryos ventralized by Xwnt8 DNA and (3) inhibition of XmyoD expression in the marginal zone. Szl can dorsalize Xenopus embryos if expressed after the midblastula transition, strengthening the idea that zygotic expression of wnts and in particular of Xwnt8 plays a role in antagonizing dorsal signals. It also suggests that inhibiting ventralizing wnts parallels the opposition of BMPs by noggin and chordin. szl expression is restricted to a narrow domain in the ventral marginal zone of gastrulating embryos. szl thus encodes a secreted antagonist of wnt signaling likely involved in inhibiting Xwnt8 and XmyoD ventrally and whose restricted expression represents a new element in the molecular pattern of the ventral marginal zone.